Westfield Insurance Co. v. TCFI Bell SPE III LLC

          ENTRY ON PENDING MOTIONS NO. 181, 193, 216 AND 217

          TANYA WALTON PRATT, JUDGE

         This matter involves an insurance coverage dispute between Plaintiff Westfield Insurance Company (“Westfield”) and Defendants TCFI Bell SPE III LLC (“TCFI Bell”) and Bell Aquaculture LLC (“Bell”) (collectively “Defendants”). Currently pending before the Court are various ancillary Motions associated with the parties' pending Motions for Partial Summary Judgment: (1) Bell's Motion for Leave to Incorporate by Reference Certain Portions of Its Response in Opposition to Westfield's Motion for Partial Summary Judgment as to Bell's Bad Faith and Punitive Damages Claims (DKT. 189) into Its Combined Memorandum in Support of Its Cross-Motion for Partial Summary Judgment/Response in Opposition to Westfield's Motion for Partial Summary Judgment (DKT. 110) (“Motion to Incorporate”) (Filing No. 193); (2) Bell's Motion for Leave to Supplement Its Appendix of Exhibits in Support of Its Response in Opposition to Westfield's Motion for Partial Summary Judgment as to Bell's Bad Faith and Punitive Damage Claims (“Motion to Supplement Appendix”) (Filing No. 216); (3) Bell's Motion for Leave to File Surreply in Further Opposition to Westfield's Motion for Partial Summary Judgment (“Motion to File Surreply”) (Filing No. 217); and (4) Westfield's and Non-party HSB's Objection to the Magistrate Judge's May 25, 2018 Order on Discovery Motions (DKT. #175) (“Objection to Magistrate Judge's Order”) (Filing No. 181). The Court will address these four pending Motions in turn. The summary judgment motions will be resolved under separate order.

         A. Bell's Motion to Incorporate (Filing No. 193)

         Westfield and Bell filed cross-motions for partial summary judgment on the issue of whether an insurance policy issued by Westfield provides coverage for the loss of Bell's fish under the “Equipment Breakdown Coverage Endorsement.” In support of its motion, and in opposition to Westfield's cross-motion, Bell argued that the endorsement at least creates an ambiguity, which, under Indiana law, must be construed in Bell's favor. After the cross-motions for partial summary judgment were fully briefed, Westfield filed a second motion for partial summary judgment; this second motion concerned Bell's claim for bad faith and punitive damages. Further discovery was completed and Bell re-deposed a representative of The Hartford Steam Boiler Inspection and Insurance Company (“HSB”), which is Westfield's reinsurer. HSB reinsured the equipment breakdown coverage endorsement and played a large role in the investigation and adjustment of Bell's insurance claim.

         During the deposition of HSB's representative, Bell learned that some HSB adjusters previously have paid claims involving animals despite the policies' inclusion of the “animals exclusion, ” which is at issue in this case. Bell learned this information in time to include it in its response brief, opposing Westfield's second motion for partial summary judgment, regarding the bad faith claim. Bell asserts that this information also is directly relevant to its argument that the equipment breakdown coverage endorsement is ambiguous, an argument asserted in response to the first motion for partial summary judgment. Bell asks the Court for leave to incorporate into its response brief to the first motion for partial summary judgment portions of its response brief to the second motion to include this new information. Specifically, Bell asks to incorporate:

a. Bell's “Additional material facts preclud[ing] summary judgment in favor of Westfield, ” Nos. 130 - 134 (Dkt. 189 at 27-28), incorporated into Dkt. 110 at 11;

and

b. The final two paragraphs in Section IV(B)(1)(a) (Dkt. 189 at 34-35) incorporated into Dkt. 110 at 20, at the conclusion of Section IV(B)[.]

(Filing No. 193 at 4.) Bell asserts that it only recently discovered this information, and justice requires that Bell be given the opportunity to fully present its arguments to the Court.

         Westfield responds that Bell's request to incorporate is untimely, coming more than seven months after briefing was completed on the first summary judgment motion. Regarding the requested incorporation, Westfield argues, “if permitted, the same would operate to preclude Westfield from addressing Bell's evidence and legal arguments, even though it has now done so in its recently filed Reply submissions on Bell's bad faith claim. See, Dkt. #200 - #204 and #206.” (Filing No. 215 at 3.) Westfield asserts that Bell's incorporation would give Bell the final-and only-word on these new facts and argument as they relate to the first summary judgment motion, which would unfairly prejudice Westfield. Additionally, Westfield argues that the evidence and argument Bell seeks to incorporate are irrelevant to the first summary judgment motion, which concerns the interpretation of the insurance policy and which does not involve consideration of extrinsic evidence.

         In order to manage its docket, to keep the case moving, and in fairness to the parties, the Court has discretion to allow or prohibit supplemental materials (in this case incorporation of later-filed argument and evidence) after summary judgment briefing is closed. See Pfeil v. Rogers, 757 F.2d 850, 857-58 (7th Cir. 1985) (briefing schedules and local rules serve “the purpose of properly framing the issues in allowing the moving party to respond to all of the resisting party's arguments in its reply brief as well as allowing the trial court to organize and control its calendar in an orderly manner”); see also Vance v. Ball State Univ., 646 F.3d 461, 468-69 (7th Cir. 2011).

         In light of the timing of the parties' discovery efforts and when Bell discovered this new information, the Court determines that, out of fairness to Bell to be given the opportunity to fully present its arguments to the Court, incorporation is warranted in this case. The Court notes that this new evidence and argument is already in the summary judgment record before the Court, albeit under a separate summary judgment motion. Thus, allowing this incorporation will not delay the case. Furthermore, the Court is capable of fairly and accurately reviewing the designated evidence proffered by Bell to determine what is relevant to the issues and to determine what the evidence actually says, rather than a party's representation of that evidence. Additionally, Westfield noted in its response that it actually did reply to this new evidence and argument by “its recently filed Reply submissions on Bell's bad faith claim.” Therefore, the Court will allow Bell's requested incorporation into the summary judgment materials for the “animals exclusion” motion, and, out of fairness to all parties, the Court also will take into consideration the submissions that Westfield provided with its Reply Brief on the bad faith claim. Bell's Motion to Incorporate (Filing No. 193) is granted.

         B. Bell's Motion to Supplement Appendix (Filing No. 216)

         Bell asks the Court for leave to supplement its designated evidence in opposition to Westfield's summary judgment motion on the bad faith claim. In its Reply Brief, Westfield challenged the authenticity and admissibility of a number of Bell's response exhibits because they lacked authentication and a sworn statement. Bell now seeks to supplement the evidence to submit affidavits that will provide authentication for the previously-filed exhibits, and Bell argues there is no real dispute as to the exhibits' actual authenticity; instead, there is only the missing sworn statements. Furthermore, some of the documents Westfield challenges were produced by Westfield to Bell and were relied upon by Westfield in prior motions practice. Bell asserts that supplementing the evidence with its affidavits will ...